Using An $8M Single-Stock Loan as an Alternative to Selling a Stock Position

• Client: French National and Resident
• Net Worth: £121m+
• Security: French-listed company shares with a market capitalisation of approximately €200m
• Loan: €8.2m
• Product: Three-year single stock loan, with a 24-month lock-in
• Interest Rate: 3.50% per annum

In this case, Enness was approached by a high-net-worth shareholder who held a highly concentrated position in a French-listed company and wanted to diversify their investment portfolio without having to sell their existing shareholding. The client was a French national and resident with a net worth of more than £121 million, with a significant proportion of their wealth held across technology investments and real estate.

The client had established relationships with private banks due to their significant wealth. However, their existing banking relationships were unable to provide the dry lending solution required. The client had initially considered selling part of their position to create liquidity, but was reluctant to reduce their existing shareholding.

Single stock lending provided an alternative financing route. By using the listed shares as security, the client could raise capital while retaining exposure to the underlying investment. This provided liquidity for diversification and other investment opportunities without requiring an immediate sale of the existing position.

A key challenge was the size and nature of the listed company. With a market capitalisation of approximately €200 million, the stock was smaller than the type of securities many mainstream private banks may be comfortable accepting as collateral. The client was initially unaware that financing could potentially be arranged against a holding of this nature, making access to specialist lenders particularly relevant.

Enness approached lenders with experience and appetite for considering concentrated positions in smaller and mid-cap listed companies. Following a detailed review of the client’s wealth, the shareholding and the proposed use of the funds, Enness successfully secured an €8.2 million single stock loan on a three-year term at 3.50% per annum, with a 24-month lock-in period.

The structure also allowed the client to retain the voting rights and dividends associated with the shares, subject to the terms of the facility. This enabled the client to maintain their existing position while using the value of the shareholding to create additional liquidity.

The facility provided an alternative to selling the concentrated position. If the client chose to sell the shares in order to repay the loan, the lender could liquidate the position in accordance with the facility terms, with any surplus proceeds returned to the client after repayment and applicable costs.

This case demonstrates how single stock loans can provide liquidity for shareholders who have significant wealth concentrated in a single listed company. Where traditional lenders may be unwilling to accept smaller or less widely traded stocks, specialist lenders can sometimes consider the wider circumstances and characteristics of the underlying security.

Enness works with specialist lenders to arrange bespoke securities-backed lending solutions for entrepreneurs, shareholders and high-net-worth individuals. To discuss your requirements, speak to a mortgage specialist.

Securities-Backed Lending Disclaimer: Enness does not provide advice on Securities-Backed Lending or investments. Lender introductions are unregulated. Terms and availability are subject to the individual circumstances, underlying securities and lender criteria.